Let’s dive into the world of commercial real estate (CRE) loans and their current situation.
CRE Loan Maturities in 2024: A Ballooning Challenge
- The portion of the $4.7 trillion in US commercial real estate debt that will come due this year has ballooned from $659 billion to $929 billion. These loans must be paid off through a sale, refinanced, or extended to avoid default.
- Many loans that were supposed to mature in 2023 were not paid off. Instead, they were modified and extended into 2024 or even further into the future. This situation has lenders and landlords negotiating deals with each other.
- The breakdown of maturities by investor type in 2024:
- Government-backed mortgages (Fannie Mae, Freddie Mac, FHA, and Ginnie Mae) on multifamily and health-care buildings: $28 billion.
- Held by life insurance companies: $59 billion.
- Held by banks (including foreign banks): $441 billion.
- In commercial mortgage-backed securities (CMBS), collateralized loan obligations (CLOs), and other asset-backed securities (ABS): $234 billion.
- Held by other credit companies (mortgage REITs, PE firms, and private-credit providers): $168 billion.
Big 4 banks living Will required by the Fed
PIMCO sees another wave of bank failures coming as commercial mortgage trouble mounts, per BI.
"The real wave of distress is just starting" for commercial property debt, Pimco's John Murray told Bloomberg.
— unusual_whales (@unusual_whales) June 24, 2024